Austereo stake swings on Village buyback

Village Roadshow is again considering cutting its stake in the Austereo radio network to help fund a further preference share buyback.

Village said yesterday it would approach its bankers for finance and consider selling non-core assets to buy back another 60 million of its non-voting stock.

The company was forced to buy the stock on market last month, after failing to get sufficient shareholder approval for a scheme of arrangement offering $1.25 a share in cash and unsecured notes.

Village managing director Graham Burke hinted last year that the company would consider selling about 9 per cent of Austereo, of which it owns 59 per cent, to fund the buyback but would not relinquish control of the company.

A 9 per cent stake in Austereo would be worth about $52 million, based on yesterday's closing price of $1.37.

Village has already bought 90 million of its own preference shares for an average price of about $1.15 per share.

After rising 3c to $1.17 yesterday, a block of 60 million preference shares would cost it $70 million.

"To fund this initiative the company will need to discuss and agree with its bankers the provision of funding in light of other obligations and also is investigating and assessing the timing of the sale of non-core assets," the company said yesterday.

"In addition, Village Roadshow will also explore the possibility of re-engineering its investment in the production division, Village Roadshow Pictures (VRP).

"This may be by way of debt, mezzanine equity or strategic partnership."

The company said the production division continued to provide growth opportunities but it was the board's view that re-engineering would strengthen the production division and create a more secure base for expansion.

"In 2004, VRP will release five films (including Catwoman and Ocean's Twelve) and, if possible, VRP intends to step up production in 2005 and 2006 with eight releases in each year, including the possibility of carefully selected bigger budget films."